When first elected, George W. Bush aspired to be the “CEO president.” The label referred only to his (overhyped) business sensibility. President Barack Obama has become the CEO president in fact, responsible for a swath of American industry and finance.

Obama flexed his corporate muscles Sunday and fired General Motors CEO Rick Wagoner for failing to produce a credible reform plan for his company. Obama said the next day that “GM is announcing that Rick Wagoner is stepping aside” – as if Wagoner hadn’t reported to the Treasury Department to receive his order to self-defenestrate.

It used to be that what was good for GM was good for the country; now, the country is going to decide what’s good for GM. It used to be that presidents only could fire chiefs of staff and Cabinet members; now, Obama can fire any of the corporate officials who effectively work for him. It used to be that the country had clearly delineated public and private sectors; now, they are mashed together in an arrangement vastly increasing governmental power.

Wagoner didn’t cover himself with glory at GM. Its market share continued to slip, from 28 percent of the market when he took over in 2000 to 22 percent today. But if Wagoner deserved to go, what about United Auto Workers head Ron Gettelfinger, whose union saddled GM with crushing legacy costs, absurd work rules and inflated wages? The $13.4 billion that has gone to GM so far was as much a bailout of the UAW as the company.

Gettelfinger’s game has been the same since the auto companies first came begging to Washington last fall – minimize concessions in the belief that, in the end, the politicians will always buckle. As Washington extends another 60-day period for GM to come up with a way to right itself, Gettelfinger hasn’t been proven wrong yet (in even worse shape, Chrysler is getting 30 days to merge with Fiat).

Our new mixed economy has major pitfalls. First, when politicians call the shots, politics trumps all. Was Wagoner a god-awful CEO, or did the Obama administration feel the need to sacrifice a corporate type to appease the increasingly angry gods of populism? Certainly Wagoner didn’t perform any worse than the CEOs of Wall Street’s big bailed-out banks. (A cynic will note that labor provided the muscle for Obama’s election campaign, and Wall Street much of the funding).

Two, if politicians and bureaucrats knew how to run car companies, they’d probably be working for Toyota or Ford. Obama’s automotive task force has almost no experience in automobiles and includes no fewer than three experts on climate change (presumably on the off chance that GM and Chrysler revive enough to begin despoiling the planet again).

Three, once a corporation is dependent on government, it makes business decisions not on the merits, but to please its political masters. GM has been heavily involved in developing the politically correct Chevy Volt, an electric car. As Obama’s automotive task force concludes, “While the Volt holds promise, it is currently projected to be much more expensive than its gasoline-fueled peers and will likely need substantial reductions in manufacturing cost in order to become commercially viable.” You don’t say?

The American system has a proven method of restructuring salvageable but insolvent companies that avoid all of these pitfalls. It’s called Chapter 11 bankruptcy, where a judge can rip up a company’s obligations and launch it anew without the taint of politics. It’s where GM and Chrysler should have gone last fall (perhaps with some minimal government support), before the Bush administration first bailed them out in a fit of political panic.

Obama is raising the prospect of allowing the companies to go into Chapter 11 if they can’t soon find that elusive path to viability. He insists that he has no interest in running the auto companies, an assurance he can prove is sincere – by not running the auto companies.

Rich Lowry is a syndicated columnist. He can be reached via e-mail at: comments.lowry@nationalreview.com.

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